When selecting a life insurance policy, it is easy to feel overwhelmed by the industry jargon and the seemingly numerous factors that play a role in determining life insurance premiums. A recent survey conducted by Life Happens found that less than 50% of Americans believe they possess a foundational understanding of the different facets of life insurance. Now more than ever, it is crucial that life insurers practice transparency regarding their policies so that Americans make educated decisions for themselves and their families.
Since its foundation in 2013, Family First Life has set itself apart from competitors by putting its clients first. Family First Life CEO Shawn Meaike has accomplished this by teaching all Family First Life agents how to effectively improve each client’s situation and meet their unique needs and circumstances. Family First Life CEO Shawn Meaike and the Family First Life prioritizes communication and transparency with all its clients and aims to inform readers on the complexities of life insurance premiums in the following article.
Within the life insurance industry, date of birth is the top factor that affects customers’ life insurance premiums. As those who have previously shopped for life insurance know, the older an individual is when first purchasing their life insurance, the higher their premiums. Life insurance companies set premiums based on how likely a customer is to pass away while their policy is active. As life expectancy goes down the older, a person becomes, life insurers will charge high premiums for those who purchase a life insurance policy later in life.
When purchasing life insurance, insurers will typically ask that customers take a medical exam and give the company access to their health records. This helps the company ensure that the customer has a clean bill of health and is unlikely to experience serious health concerns in the near future that could result in their death. If an individual’s family has a history of serious medical issues, such as cancer, stroke, or heart disease, the customer will likely have to pay higher premiums than someone with a relatively clean family history. However, even if an individual’s family history is free of severe medical conditions, they will still have to pass the insurance company’s medical exam that will check weight, blood pressure, cholesterol levels, and mental health disorders that may indicate future medical conditions.
Another major factor in determining life insurance premiums is gender. Typically, men can expect to pay much higher premiums when it comes to life insurance than women as they are considered “higher risk.” Numerous scientific studies and surveys have found that men die at a much younger age largely due to having much more dangerous jobs and lifestyles than women. Fields with a high degree of risk, primarily in labor industries such as construction and agriculture, employ predominantly men. Men are more likely to climb ladders, use heavy machinery, and take risks on job sites than women. This has led to women living, on average, five years longer than their male counterparts. As life insurance companies prefer customers to outlive their policy limit, insurers will typically offer much lower rates to women.
It may surprise some readers to learn that what you do in your off-time is of great interest to your life insurer. More often than not, insurers are curious to see if their customers are thrill-seekers. Policyholders may see their premiums increase if they enjoy bungee jumping on the weekends, racing cars, or rock climbing. This is because insurers are looking to see if customers participate in high-risk hobbies. According to the National Safety Council, bungee jumping’s mortality rate sits at 1 in every 500,000 jumps. Although this means that a person is more likely to die from a bee sting or being struck by lightning, life insurers still prefer their policyholders to have low-risk hobbies.
Another hobby that is likely to increase policyholder premiums is smoking. The health risks associated with smoking are numerous, and of the 7,000 chemicals found in cigarettes, 70 are known to cause cancer in people and animals. Science has shown that individuals who smoke cigarettes are 15 to 30 times more likely to get lunch cancer or die from lung cancer than individuals who do not smoke. As a result, insurers will typically charge smokers much higher premiums; however, those who have quit smoking since purchasing life insurance can call their provider to check if they now qualify for non-smoker status and a lower rate.
Not all jobs hold the same degree of risk. While someone who works in an office setting is very unlikely to be injured and killed during their workday, someone in the logging industry cannot say the same. Today, loggers hold an average annual fatality rate more than 23 times that of the average US worker, of 109.3 per 100,000 workers. Those who hold employment in the logging industry, or are pilots, fishermen, roofers, or those whose work exposes them to toxic chemicals or heavy machinery can expect much higher premiums than those in an office setting.